BUSINESS
03/28/2008 05:12 am ET | Updated May 25, 2011

Paulson Defends U.S. Rescue Of Bear Stearns

U.S. Treasury Secretary Henry Paulson on Monday defended government moves to rescue Bear Stearns Cos Inc (BSC.N) from bankruptcy, saying it was important to ensure the orderly function of financial markets.

Speaking to reporters following a White House meeting between President George W. Bush and his economic advisers, Paulson said those worried about the government rescue creating a "moral hazard" should keep in mind that Bear Stearns (BSC.N) shareholders face considerable losses with the sale of the investment firm to JPMorgan Chase (JPM.N) for $2 a share.

Moral hazard is the concept that investors might take greater risks on the belief that government policy would protect them from suffering losses.

Keep Reading...

Read more on Reuters